by Steve Haner,

The regional carbon tax on electricity generation favored by Governor-elect Abigail Spanberger and legislative Democrats rose to a record amount in the December auction, $26.73 per ton of carbon emissions.

That is a 20% increase from three months ago and is 4% higher than the previous top price, set last year. The tax amount is up 80% since Virginia left the process just two years ago. The Thomas Jefferson Institute’s predictions that the tax take in Virginia will reach or surpass $500 million per year looks a safe bet. 

Had Virginia sold 5 million allowances in the December 3 auction, about what it will be selling once it returns to the program, generation companies would have paid $133 million or so. 

This, of course, is the Regional Greenhouse Gas Initiative, or RGGI. There are four such auctions a year. Governor Ralph Northam (D) took Virginia into RGGI, collecting $828 million over three years. Two years ago, Governor Glenn Youngkin (R) was able to repeal the underlying state regulation, but Spanberger (D) expressed the intention to join again during her campaign. 

The only suspense, really, is how and when Virginia rejoins the other ten states still in the compact. RGGI runs on a three-year contract schedule and restarting as of January 2027 is the easiest path. It is possible, however, that Virginia could join in time to participate in some of the 2026 auctions, the final four in the three-year cycle. 

One of two things is likely to happen. The Virginia Court of Appeals, which is considering the Youngkin Administration’s appeal of a legal challenge to the repeal, could issue a ruling now and uphold the circuit court’s ruling that the regulation could not be repealed.

Or the incoming General Assembly could pass legislation to rejoin as part of a “must pass” emergency bill such as the annual set of corrections to the current budget. The Republicans who control Pennsylvania’s state senate refused to pass a budget that included RGGI membership and thus killed it there. Republicans have sufficient votes in the new Virginia legislature to prevent it being passed on an emergency basis, if they wish to. They do not have the ability to stop a regular bill, which could take effect in time for the September and December 2026 auctions.  

Then the third thing will happen, the energy companies that buy the allowances (pay the tax) will figure out how to pass the cost along to customers. When last we saw it on our Dominion bills, it worked out to $4.43 for every 1,000 kilowatt-hours of use – residential or industrial.  Will this be touted as move toward affordability? Sure, why not?